Foremost Income Fund Special Non-Cash Distribution

CALGARY, ALBERTA--(Marketwired - Dec. 31, 2015) - Further to press releases and related disclosure of December 7 and December 14, 2015, whereby Foremost Income Fund (the "Fund") announced that it would distribute its 2015 taxable income by a non-cash distribution in the form of units of the Fund (the "distribution"), this press release advises of the estimated amount of income distributed, and provides guidance on determination of the estimated unitholder income and non‐resident unitholder withholdings. For guidance on income tax calculation, see "GUIDANCE ON UNITHOLDER INCOME TAX CALCULATION" below.

Note that, as described in more detail below, non‐resident unitholders are required to remit withholding taxes to the Canada Revenue Agency ("CRA") in respect of the distribution on or before January 15, 2016. Non‐residents wishing to provide for withholdings by surrendering units are required to surrender such units on or before January 8, 2016, and the return of the cash payment through Computershare no later than January 11, 2016. See "GUIDANCE ON NON‐RESIDENT UNITHOLDER WITHHOLDINGS" below.

Record Date, Amount and Unit Consolidation

The record date of the distribution was December 28, 2015, and the distribution has been completed as of the issuance of this press release.

The Board of Trustees of the Fund has determined the estimated amount of taxable income distributed is $10,000,000. The exact amount of taxable income distributed will be based on the taxable income of the Fund for the financial year ended December 31, 2015 and will be announced via a press release once the taxable income is determined in February 2016.

The value of each unit distributed as determined in accordance with section 5.7 of the Deed of Trust of the Fund dated November 12, 2005 as amended (the "Deed of Trust") is $6.25, resulting in a distribution of 1,600,000 units of the Fund (the number of units issued may be adjusted later depending on the final determination of the amount of taxable income distributed).

Also as previously disclosed, in accordance with the terms of the Deed of Trust, the number of outstanding trust units has been consolidated, such that each unitholder now holds the same number of trust units as before the distribution.

GUIDANCE ON UNITHOLDER INCOME TAX CALCULATION

As previously disclosed, individuals and taxable entities ("taxable unitholders") will incur a tax liability in respect of the distribution.

The effect of the distribution and consolidation is that taxable unitholders will receive income in respect of the distribution currently estimated to be $0.54 per unit held prior to the distribution.

GUIDANCE ON NON‐RESIDENT UNITHOLDER WITHHOLDINGS

Each unitholder that is a non‐resident of Canada will be required to remit tax withholdings in an amount dependent on such unitholder's jurisdiction of residence. Withholdings must be remitted to the Canada Revenue Agency (the "CRA") on or before January 15, 2016. A non‐resident unitholder may remit such withholdings by (a) a cash payment independent of the distribution, or (b) determining the number of units constituting equal value to the amount of the required withholdings, rounded up to the nearest whole unit in accordance with the formula below, and surrendering those units to Foremost. In exchange for surrendering such units Foremost will, through Computershare, pay cash to the unitholder which the unitholder can then remit to the CRA as the required withholdings. Due to the consolidation, surrendered units will be valued at the distribution value per unit, plus the estimated income per unit.

The formula for determining the number of units required to be surrendered is set out below:

Number of units to be surrendered = Unit Multiplier x number of units held prior to the distribution by the non‐resident, then rounding up to the nearest whole unit,

Where the Unit Multiplier is determined in accordance with the following table:

Non‐Resident Withholding Rate	Unit Multiplier
15%	0.01194
25%	0.01989

Please take notice that any non‐resident unitholder wishing to provide for withholdings by surrendering units is required to surrender such units in accordance with the instructions below on or before January 8, 2016 in order to allow for the administration of the surrendered units, and the return of the cash payment through Computershare to enable remittance to the CRA. Non‐resident's are obligated to ensure the required withholdings are remitted to the CRA. All non‐residents should consult your professional advisors to determine and ensure the timeliness of your response in this regard.

Instructions to Brokers:

Brokers acting on behalf of non‐resident unitholders whose units are held within CDS, and who wish to provide for withholdings by surrendering units, will be required to withdraw the units that represent the withholding obligation (determined in accordance with the formula above) from CDS and to provide a letter to Computershare in connection with the withdrawal.

A broker may make a single withdrawal representing the aggregate tax withholding obligation for all of the broker's non‐resident unitholders. The units withdrawn must be registered in the broker's name and held in book on the Direct Registration System ("DRS") with Computershare. If the withdrawal results in the issuance of a certificate, the broker must return the certificate to Computershare. Payment from Foremost will be in the form of a cheque issued by Computershare and payable to the individual or entity in whose name the DRS position or certificate is registered.

Once a broker has setup the withdrawal of units on behalf of a non‐resident as set out above, the broker is required to send a letter to Computershare by fax to (905) 771‐4082. In accordance with subsections 3.7(b) and 3.8(a) of the Deed of Trust, the letter must include the following:

1. The withdrawal ID;
2. The broker's CUID;
3. The number of units withdrawn;
4. A statement that the units represented by the withdrawal ID are being surrendered to satisfy the withholding tax obligations of the broker;
5. A listing of the beneficial holders that the withdrawal represents that includes:
   1. each beneficial holder's account number with the broker,
   2. the number of units surrendered for the beneficial holder, and
   3. the country of residency of the beneficial holder.

The letter should be addressed to Computershare and Foremost and may be directed to the attention of Paul Colton at Computershare. The unit withdrawal and letter must be received by Computershare on or before January 8, 2016.

Failure to provide the units or the letter on or before January 8, 2016 may result in a delay in providing funds. Neither Foremost nor Computershare are liable for any consequences of such delay or any delay in remitting withholdings to the CRA.

Cheques will be left at the counter of Computershare's Toronto headquarters for any broker that is in Toronto, expected to be available no later than January 11, 2016. Otherwise cheques will be delivered by courier.

For any inquiries with Computershare in this regard, unitholders and brokers are instructed to contact Paul Colton (416) 263‐9631 (available January 4 and thereafter).

This information is intended for summary purposes only and is subject in all respects to the Deed of Trust. All dollar amounts are in Canadian dollars. The income and other tax consequences of holding, redeeming or disposing of units will vary depending on the unitholder's particular circumstances, including the jurisdiction(s) in which the unitholder resides or carries on business, and whether the unitholder is an RRSP, RESP, RRIF, PPSP or TFSA. Accordingly, this information is of a summary nature only and is not intended to be legal or tax advice to any prospective purchaser or any unitholder. All unitholders should consult their own legal and tax advisors.

On behalf of the Trustees Foremost Income Fund

Bevan May, Interim President/CEO and Trustee

FORWARD-LOOKING STATEMENT

Certain statements in this news release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this news release, such statements use words such as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements include statements the Fund's intention to proceed with a Unitholders' meeting and information regarding the Trustees' views of the future prospects and tax treatment of the Fund and tax treatment of the Special Redemption, the Fund's expectations regarding the future availability of cash to meet redemption requests and the Trustee's expectations for redemption prices in December 2011 and January 2012. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this news release. These forward-looking statements involve a number of risks and uncertainties, including: the impact of general economic conditions, industry conditions, changes in laws and regulations, increased competition, fluctuations in commodity prices and foreign exchange, and interest rates and stock market volatility.